I am back...and this time I have nothing good to say, again. Simply put, we are no further along than the 3rd inning of this game, and innings 3-7 are going to fucking suck.
While the street has seen layoffs for some time, the rest of America is just beginning to realize the harsh realities of where we are....
Over the weekend, I attended a friend's Birthday party at the Borgata in Atlantic City. Now granted I was NOT expecting crowds, but what I found shocked me. On a Friday night, at 1130pm, the place was almost a ghost town. Don't get me wrong, there were people in the place, but a bare minimum. Tables were not crowded, the slots were empty and what once was a thriving bar scene was non-existent.
The "rest" of America is just beginning to feel the pain. Yes I understand the losses to the 401-K's. Yes I understand the significant decline in housing prices, but the consumer has not even begun to DE-LEVER. What we have lived through for the past 12 months has been the financial unwinding their leverage. I try to explain this to my friends, collegues....whoever will lend an ear. Unfortunately, people do not want to listen. How could it get worse? Stocks are down 50% or more????
As I just said, the consumer has not de-levered. You know how they do that? They get kicked out of their homes (barring a Government sponsored plan to reduce mortgage payments) and they begin to rent, again. They do not spend a mother fucking penny on non essentials.
You know what a non essential is?
- car
- cellphone
- house
- computer(of any kind)
- video game system
- dvd players
- building materials and all other refurbishing materials/home decor items
- furniture
- non-store brand foods
- dinner out
- movies
- cable/internet with high end service or movie channels
- jewelry
- landscaping work on home, as well as tools or services for same
- toys
- videos
- new pocket books and shoes for the ladies
do you get my point? THE AMERICAN CONSUMER WILL NOT, BECAUSE THEY CANNOT SPEND ANY MORE!!!!
Now, here is the kicker.....the average Joe the Plumber has not seen the wave of layoffs that are about to hit him and his family/friends like a Tsunami in Malaysia.
Having breakfast with friends at a local eatery outside of Atlantic City, as the rest of the group lied about their winnings, I listened to the "locals" talking about some of their friends who had been laid off...that the casinos were monitoring incoming traffic and sending staff home through the evenings as volumes dictated. When i pretended to be reading a local paper and listened in on another group's conversation, it was eerily similar. How building and all construction had come to a screeching halt in the last few weeks. That they would not be able to spend on Christmas like they have in the past--and their was an almost apathetic tone that this year, there would be lumps of coal in the family stockings.
Just wait. JUST FUCKING WAIT. As the number of unemployed grows, so will the fear amongst all of us. EVERYONE will be wondering, will I be employed or will I be able to sustain my family at the end of 09? At the end of 2010. The continued negative realities will continue to curb all spending. We fucked up once before, during the summer when the Government gave everyone a check, and the fucking morons that live in this country spent it on 720i HDTV's( I mean if you are going to blow the check on something frivolous, then blow it on a 1080p TV--JESUS!!)
The next stimulus plan will be spent paying bills, appropriately. However, I digress. The point is that even if you still have a job next year, you will not be inclined to spend. Not inclined to spend means that profits will go lower and lower....it is inevitable. With profits so goes stock prices.
We have tested 7800 several times intra-day. We are going to break that, and close lower for the session. THAT will freak a lot of people out, and the last wave(hopefully) will begin. Where do we bottom? Stay tuned for tomorrow's call on where to get long and strong.
--The Angry Trader.
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